The Impact of Political Risk on Sovereign Bond Spreads - Evidence from Latin America

Konferenzbeitrag

Sovereign risk is defined as a country?s ability-to-pay and willingness-to-pay its debt. This paper examines how cabinet reshuffles affecting the ministry of finance or economics are perceived by sovereign bond holders in twelve Latin American countries from 1992 to 2005. We find that such political news instantaneously increases bond spreads. Furthermore, spreads trend significantly upward in the 40 days leading up to the minister change, before flattening out on a higher level in the 40 days thereafter. Evidence suggests that uncertainty about the future course of economic policy and the government?s willingness-to-pay increases refinancing costs for respective emerging markets.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Proceedings of the German Development Economics Conference, Göttingen 2007 ; No. 24

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Information and Market Efficiency; Event Studies; Insider Trading ; National Debt; Debt Management; Sovereign Debt ; International Lending and Debt Problems ; International Finance: General
• Thema: political instability ; country risk ; bond spreads ; Latin America ; Portfolio-Investition ; Öffentliche Anleihe ; Politische Stabilität ; Risiko ; Öffentliche Schulden ; Schätzung ; Lateinamerika

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Moser, Christoph
• Ereignis: Veröffentlichung
• (wer): Verein für Socialpolitik, Ausschuss für Entwicklungsländer
• (wo): Göttingen
• (wann): 2007

Weitere Informationen

• Handle: http://hdl.handle.net/10419/19887
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ